How to protect SSI recipients through estate planning

On behalf of The Flanigan Law Group, A Professional Corporation posted in Estate Planning on Monday, October 5, 2015.

The goal that people have when creating an estate plan is to leave something for their heirs and beneficiaries. While this is a well-intentioned goal, it could have adverse and unintended consequences, even for those in financial need.

People who receive supplemental security income (SSI) from the federal government could lose their right to such benefits if they inherit money or assets from a loved one. Federal rules prohibit an SSI beneficiary from receiving benefits if they have more than $2000 in assets. As such, leaving money to pay bills that are normally paid by the parents or a caregiver could result in a denial of future benefits.

How can one prevent this from happening? This post will highlight a couple of ways to do so.

Develop special needs trusts – If an SSI beneficiary cannot own assets over a certain amount, another entity may. This is where a special needs trust can be beneficial. Parents or loved ones who want to leave something to someone receiving SSI will bequeath an asset or money to the trust, which will be managed for the beneficiary’s benefit.

Create an ABLE account – Last year, Congress approved the implementation of ABLE accounts, which allow families to set aside up to $14,000 per for special needs children that will enable them to pay for regular expenses. Federal law allows such accounts to grow to up to $100,000 without Medicaid or SSI eligibility being affected.

The preceding is not intended to be legal advice. An experienced estate planning attorney can help those preparing their estate plans so that disabled beneficiaries will not be adversely affected.

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